Most people approach the tax season with fear. Between the W-2, 1099s and endless receipts, the process can feel overwhelming, especially when you are ready for how much money you owe. But deep inside the IRS code are neglected gems – Tux’s breakdown, credit and deductions never got involved. These “IRS Easter Eggs” are not loopholes. They are perfect legal benefits designed to reward wise financial behaviors, alleviate life transitions and provide relief during difficult times.
Ready to discover some serious savings? Here are 11 IRS rules that can cut tax bills faster than what you said, “adjusted total income.”
1. Savings’ credit
The credit of a saver is one of the least credits in the Tax Act. It rewards middle-income earners who contribute to retirement accounts, such as a traditional IRA, a Roth IRA or an employer-sponsored 401(k). Depending on your application status and income, you can ask for 10%, 20% or even 50% of your retirement contribution with a maximum credit of $1,000 (co-married, $2,000 if married).
This credit is especially beneficial for young workers, part-time workers and students’ careers. Most importantly, this is a regular tax advantage that contributes to retirement plans.
2. Income Tax Credit (EITC)
EITC is a refundable tax credit designed to help workers and families with low to medium incomes. The amount of credit varies depending on your income, marital status, and the number of qualified children you have.
In the 2024 tax year, families with three or more eligible children will have a maximum credit of $7,830. Even childless taxpayers between the ages of 25 and 64 can meet the requirements despite their small credit.
What makes EITC so powerful is its returnability. Even if your tax bill is zero, the IRS will use the credit as a refund. However, the IRS estimates that one in five eligible taxpayers do not require EITC every year. That’s the free money left on the table.
3. Medical expenses
Most people know that they can deduct out-of-pocket medical expenses, but many don’t realize how practical the category is. If your unpaid medical expenses exceed 7.5% of your adjusted total income (AGI), you can deduct excess fees. Deductible fees include travel and accommodation for medical care, prescription medications and insulin, hearing aids, glasses and contact lenses, dental and orthodontic treatments, and home modifications for medical purposes (such as wheelchair ramps or grab rods).
You can even deduct mileage from round trip medical appointments. It is worth keeping a detailed record, as these little-known costs can increase rapidly.
4. Educator expense deduction
Educators in K-12 schools often spend hundreds of dollars on classroom supplies. The IRS allows qualified teachers, counselors, principals and assistants to deduct up to $300 in unpaid expenses or $600 if both spouses are educators. Qualified items include classroom supplies and books, Covid-19 protection programs (such as PPE and disinfectors), educational software and professional development courses. Unlike many deductions, this does not need to be listed item by item, it can directly reduce your taxable income.
5. US Opportunity Credit
Colleges aren’t cheap, but the U.S. Opportunity Tax Credit (AOTC) can reduce the burden by $2500 per year at $2500 per year. AOTC is suitable for the first four years of higher education and can be used for tuition, fees, books and required course materials.
What makes this credit stand out:
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It is partially refundable (up to $1,000).
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You can ask it for each qualified student.
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It has a higher income level ($90,000 per file is over $90,000, and $180,000 for joint filers in 2024).
When filing, please keep Form 1098-T on the school side and don’t forget to subtract any scholarships or grants from the eligible fees.
6. Ministry of the Interior Deduction
If you are a self-employed person, the Home Office deduction can be a gold mine. As long as a specific part of the home is used on a business regularly, you can deduct rent or part of mortgage, utilities, internet, insurance and repairs.
Even economic workers, freelancers and part-time entrepreneurs are eligible. The deduction can be calculated using a simplified method ($5 per square foot up to 300 square feet) or actual expenses.
W-2 employees are often no longer eligible unless under a very specific arrangement enjoyed by employers, but this remains a powerful tool for the deputy scammer.
7. Children and care credit
If you pay for childcare so that you can work or look for a job, you may be eligible for a child and dependant nursing credit. The credit is worth up to $3,000 for one dependent person, while the two or more expenses are worth $6,000. Qualified fees include daycare centers, family nanny, preschool and after-school plans, and summer camping
Even caring for the elderly or the dependents of the disabled. To request it, you need the name, address and tax number (or SSN) of the care provider.
8. State sales tax exemption
Item-by-item taxpayers can choose between deducting state income tax or state business tax to provide a larger stakeholder. If you live in an income tax state like Texas, Florida, or Nevada, the sales tax break will be a game-changer.
Even if you don’t keep every receipt, the IRS provides an optional business tax calculator based on your income and postal code. However, if you make a large purchase, such as car, boat, or home renovation materials, you can add it to your estimate.
9. Health Savings Account (HSA) Donations
HSA is one of the few triple tax preferential accounts available:
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Donations are tax deductible.
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Growth is tax-free.
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Withdrawals of qualified medical expenses are tax-free.
Individuals’ HSA contribution limit is $4,150 for tax year 2024, households are $8,300 and additional income for those aged 55 and older. Unlike FSA, HSA funds can be invested like retirement accounts all year round.
10. Energy Efficiency Tax Credit
Want to make your home more energy-efficient? The IRS will help pay for the fees. Under energy-efficient home renovation credits, you can claim up to 30% of the cost of qualified improvements, including solar panels, geothermal heat pumps, energy-efficient windows, doors and insulation materials, and electric vehicle charging stations.
For solar installations, applicable residential clean energy credits are worth thousands of dollars over time. Save receipts, authenticate and install documents.
11. Charitable donations
Although the rules for the temporary pandemic era that allow charitable donations are over, many itemized taxpayers still miss out on the deductions for small donations. Qualified charitable deductions include cash donations, donations of goods (clothing, appliances, etc.), charity-driven mileage (14 cents/mile), and fees incurred when volunteering. Always receive written confirmation of donations of over $250 and keep records even for small donations.
Don’t pay more than you owe
These hidden IRS “Easter Eggs” may not be advertised on the tax form, but they are completely legal and are designed to help taxpayers get fair deals. Tax laws are complex, but with a small amount of research or with the help of a qualified tax expert, you can find opportunities to lower your bills and maximize your refund.
Even missing one of them could mean hundreds or thousands of dollars in losses. Don’t put money on the table.
Have you ever discovered a tax break that you didn’t know existed? Which of the following IRS “Easter Eggs” surprises you the most?
Read more:
10 times, you should pay taxes every quarter
What to know before taking out a loan
